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Wigton to expand into solar energy, add more wind turbines

Published:Friday | March 29, 2019 | 12:00 AMSteven Jackson/Senior Business Reporter
Wind turbines at Wigton Windfarm in Manchester
Rose Hill in Manchester offers the strong, steady winds that power Wigton’s turbines.

Wigton Windfarm Limited, which operates wind turbines in Manchester and has refinanced US$49 million of its debts at lower rates in preparation for listing on the Jamaica Stock Exchange (JSE), will be growing its footprint by constructing solar energy plants and additional wind turbines when the renewable energy tenders emerge, according to Milverton Reynolds, managing director at the Development Bank of Jamaica (DBJ).

Reynolds, who made the revelation at the Mayberry Investor Forum in New Kingston on Wednesday, said that the funds for refinancing were all raised locally. The DBJ oversees the divestment of state-owned entities to the private sector.

Wigton is a subsidiary of the state-owned Petroleum Corporation of Jamaica. The Jamaican Government plans to list the company in a bid to raise money for the Consolidated Fund and also to get at least 10,000 Jamaicans holding equity in the company.

“The proceeds of the IPO (initial public offering) will go towards the Government and it will be allocated to areas of greatest importance, whether to hospitals, schools, the education system, and so on,” said Minister of Science, Energy and Technology Fayval Williams, who also addressed the forum at The Knutsford Court Hotel. The forum sought to give an overview of Wigton Windfarm rather than its financials or aspects of its prospectus for listing.

Official estimates, however, show that the refinanced ‘new loans’ are expected to slash finance costs at Wigton by one-third, saving more than $300 million annually in finance expenses. That equates to more than half the estimated profit after tax at some $590 million projected for its year end in March 2019, according to the Jamaica Public Bodies Report tabled in Parliament recently.

Revenues at Wigton are estimated at $2.5 billion for the financial year ending March 2019 or 6.3 per cent higher-year on-year. It is estimated to make profit before tax of some $780 million, compared to $1 billion a year earlier, but that’s due to a one-off item in the prior year of more than half of the profit of 2018.

The company’s total net assets are $9.37 billion, with the bulk of it being the value of its turbine fixed assets. Additionally, $2 billion of its $2.3 billion in total equity comprises accumulated profits as at March 2019.

Wigton Windfarm, incorporated in 2000, constructed its initial wind turbines in 2004 and then underwent three phases of expansion, constructing a total of 44 turbines that produce 62.7 megawatts of power.

General Manager Earl Barrett indicated that Wigton can put in additional turbines that produce another 40 megawatts of power at its current location, but said they have identified other areas across the country that can accommodate an additional 160 megawatts of power.

Growth in renewable generation is part of the Government’s plan to add at least 670 megawatts of new power from renewables over the next 20 years.

Currently, the country provides about 15 per cent of its electricity supply from renewables, but Wigton’s projected growth would put that figure to 56 per cent of the total power output in two decades.

Official estimates show that Wigton’s new loans is projected at J$6.9 billion for the year ending March 2019, reflecting the bulk of the refinancing in local currency. The result of the refinancing reduced its finance costs by one-third to $560 million, compared to $877 million a year earlier.

Wigton will embark on a multi-decade strategic plan which involves expansion of its existing capacity. “At 56 per cent renewables by 2037, what that says to me is that there is opportunity, and so it’s for us to take advantage of those opportunities,” said Wigton Chairman Oliver Holmes.